NuFox’s Live TV Strategy

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Hopefully everyone enjoyed the annual football spectacular known as the Super Bowl. Instead of parsing which ads did the best–we don’t have a data driven way to do that–or reviewing the half-time show–that’s what critics are for, I guess–we need to look for business lessons. Since we don’t have the ratings for the game, it seems like a good time to check in with “NuFox”, my name for the leftover assets that Disney didn’t buy from 21st Century Fox. 

Most Important Story of the Week – NuFox’s Super Bowl Strategy

I’ve recently been playing a Euro board game called Terraforming Mars. Board games aren’t quite as good an analogy as sports for business, but for teaching strategy, they are pretty useful. (And they’re fun.)

In a boardgame, at some point everyone can realize the end game is coming and plan accordingly. (This is especially true in the newer generation of board games that use victory points, instead of the oldies like Risk that go on forever.) As the final rounds approach, all of a sudden all the players start trying to sell resources to get victory points. In Terraforming Mars, this means you start buying special awards and milestones to get those points, instead of just accumulating cash. (You see this on Ticket to Ride too.) 

This made me think of Rupert Murdoch the last few years.

Murdoch knows he won’t live forever, and it’s unclear how much his combined 21st Century Fox was worth on it’s own. So he found a buyer, played them off another buyer, and he had $71 billion dollars. Those were his victory points, if you will, for a life spent in media and entertainment. 

(Side question: Who won the Disney-Fox deal? I’d actually say it could be “both”, since Disney was able to launch Disney+ and gain control of Hulu because of the deal. But if anyone won the deal, it’s Murdoch. It’s hard to see how he didn’t cash out at the absolute top.)

Where boardgames are different than real life is that real life keeps going on. If you’ve lived your life as a media mogul, you don’t stop pioneering business models just because you sold most of a company for $71 billion dollars. Since he had a few pieces left–Fox broadcast, FS1 and Fox News, mainly–well, he had to develop a plan for those assets. 

This is, in my mind, the genius of Rupert Murdoch. (And as I’ll clarify later, genius in the business sense doesn’t translate to him being a good person. One could argue he caused Brexit in the UK and hyper-partisanship in the US, which is a level of influence no media outlet should have.)

The genius is he sees the entertainment landscape, and when he sees a new strategy, he focuses all in on that strategy. Then, when he’s maximized that strategy, he sells high on the assets. Take broadcast TV. All the broadcast and cable channels see the same declining live TV viewership numbers. And declining Live+3 numbers. And declining Live+7 numbers. You get the picture. 

So what do you do? Well, make more live entertainment. 

And so every broadcaster is doing more live-ish entertainment. Live musicals like Grease or The Little Mermaid Live or Jeopardy in Primetime or NBC’s Sunday Night Football.  Fox has those too, but it looks like soon that’s all they’ll have. It seems obvious, but only Fox has decided to throw almost everything away for that one goal. Sports, wrestling and reality shows like The Masked Singer and Lego Masters. We’ll probably see a few more live-ish reality shows and sports coming soon. I could see more integration of Fox News as stunt programming. 

If Fox keeps scripted shows, it will only be at a price it can afford. Since they sold the TV studio–which is almost a duplicate effort to Disney’s processes–it unburdened them even further. Fox broadcast isn’t trying to help make the sister TV studio profitable because there is no studio to please. Moreover, of the assets which are at the most risk of the cable bundle disintegrating–cable channels and RSNs–it sold those to Disney. 

The key question is “Will this succeed?” On one hand, it won’t. In that folks looking for a return on their investment will continue to see skyhigh growth in tech stocks like Netflix or Amazon or Apple. That’s the “future” of entertainment, and one shouldn’t mistake this strategy for winning the future.

On the other non-stock price hand, though, they likely will generate free cash flow. Which is nothing to sneeze at. Cable and live TV are definitely decaying users, but they are far from zero. And even then Fox will live on in vMVPD bundles if those survive. Sometimes we forget that business isn’t about conquering an industry, but generating positive returns for shareholders. NuFox has a strategy to do that.

Are there any challenges to this strategy? I’d say one in particular, which is the price of live sports. This is the “curse of the mogul” in action, where the talent ends up collecting it’s share of the profits. Since the NFL, NBA, WWE and other sports leagues know how important they are to live rights, their prices will go up concurrently. This makes it tricky to keep generating outrageous returns.

I admire focused strategies. Most strategic thinkers would say the same thing, whether it’s business, sports or board games. A good strategy is a focused one, which can be hard to find in today’s tech/entertainment landscape. NuFox won’t experience double digit growth anytime soon, but they will make money, which is something.

Other Contenders for Most Important Story

Troubling Earnings for Telecom Giants Imply that Content is Not the Savior

It’s earnings season once again, which provides a wealth of data to shift through to figure out, well, who is winning and who is losing. In entertainment, if last week had a theme, it was the struggle for the “communications” folks–my catch all for cable, satellite, cellular and anything managing the delivery–who decided to go all in on “entertainment” to drive subscribers.

The leader here is AT&T. They lost another host of customers, leading to (it feels like) every analyst again pointing out they overpaid for WarnerMedia, with one analyst going so far as to predict the company will break itself up.

Comcast is a little better in that they didn’t lose as many customers, but it’s not like their cable business is growing either. They desperately need Peacock to succeed to shore up that part of their subscription business.

In the most explicit version of this, Verizon has just written down their content investment. Again. So all the acquisitions in pursuit of building Oath (AOL and Yahoo) just didn’t pay off. (Relatedly, Verizon added subscribers–which bodes well for Disney–but didn’t add profit. Meaning these content deals may do more for the content owners than the telecom firms.)

In short, it turns out that owning content/content production may not be the flywheel driver all the communication firms hoped it would be. That isn’t a hugely controversial statement, since many folks predicted this at the time.

But let’s be controversial for a moment:  I don’t think entertainment will be the flywheel driver that Apple, Amazon, Facebook and Google desperately want and pretend it to be either. If entertainment really does acquire subscribers, it should work for the communication companies. But there is so much entertainment, that offering free TV shows isn’t as much of an inducement as it seems. We’ll see. (And more to say on this.)

The People Carousel: Disney, Apple, CBS Edition

A few executive shifts deserve a mention. Though, as usual, there is my caveat that we have no idea if any of these executive shifts matter. Since it’s Super Bowl season, we can use a football analogy. Every year the NFL routinely hires a bunch of coaches (and general managers) and then fires them the next year. Sometimes coaches become home run hires; often they’re all perfectly average. Trying to predict which hires become the “game changing” ones is thus pretty difficult. It’s tough to tell that in the coverage, though, since most entertainment hirings are routinely applauded.

The specifics:

– First, Disney lost another Fox executive and that studio seems likely to slide into near irrelevance, which only further reinforces the idea that Disney overpaid for Fox if they can’t monetize their whole film and TV studio’s output.

– Second, Apple TV+ hired a major Netflix engineer. This matches a broader trend I’ve seen where both Amazon and Netflix are being poached for their software execs, the way Amazon and Netflix poached entertainment execs. Except, since software hires aren’t sexy, you don’t see this hyped as much in the press. 

– Third, CBS CEO Joe Ianniello is leaving CBS, to be replaced by George Cheeks, of NBC Universal. Cheeks will report directly to ViacomCBS CEO Bob Bakish, and I have to say this is the one move I do believe is a downgrade. For all his faults–scratch that, for Les Moonves sins–Moonves was in the top tier of development execs, who took CBS to the top of the ratings and kept it there for a decade plus. Cheeks won’t be able to replicate that success.

Netflix Marketing Shift

Netflix let go of 15 employees in the marketing team which, as some folks noted, is relatively small in a company of 3,900 employees. True. But given that the marketing folks were part of the specific show marketing teams, and Netflix is pivoting to a platform marketing approach, this move seems notable.

I see two dueling data points that likely motivate this change. First, as Netflix’s two minute data point indicates that they can launch anything on the platform as long as folks show up to the platform. So show-by-show launches seem less important. Second, subscriber growth is stalled in the US and slowing elsewhere. Netflix is hoping they can get lapsed customers back onto the platform, and then the shows will market themselves. I’d argue this is short-sighted, but we won’t see the results for a few years.

Data(s) of the Week – Vague Earnings Performance Summaries

For all the “stuff” I give Netflix about how little data they provide, they are somehow number one amonst streamers because the rest are terrified about providing any data.


CBS led the charge by letting us know that Star Trek: Picard broke “streaming records” on the platform, an impressive “180%” better than Star Trek: Discovery the year before in terms of subscribers. The only conclusion we can draw from this is that CBSAA really is a Star Trek streaming platform, which is worth about 5 million customers in the United States. (Because they won’t even tell us how many subscribers they have. Past estimates have put it around 10 million.)


Apple didn’t provide any numbers. Just that Apple TV+ is off to a “rousing” start. Meanwhile, Ampere Associates estimates Apple TV+ has 33 million mostly non-paying users

Amazon Prime

Amazon had another strong quarter, but the only nugget from streaming is…well nothing. But they did announce that they have 150 million Prime subscribers worldwide. The unfortunate part is that number will be quoted as Prime Video’s user base, even though we have no idea how many Prime members watch Prime or would stay subscribed if Amazon split video from music and delivery. 

Interestingly, Amazon did reveal that Amazon Music customers–though how this is defined is unclear, since Amazon Music Unlimited is a separate service that Amazon told us “grew more than 50%” in 2019–were over 55 million worlldwide. So presumably Prime Video is below that? Or they had 40 million active Fire TV users. So is Prime Video also below that?


Joining Amazon in the lack of subscriber data category is AT&T, which has stopped reporting HBO’s subscriber numbers since completing the Time-Warner merger. As their future somewhat hinges on the success of HBO Max, choosing to not report numbers seems fairly egregious. All we know is that linear subscribers is down in the US, but up internationally and digitally.

The Entertainment Strategy Guy

The Entertainment Strategy Guy

Former strategy and business development guy at a major streaming company. But I like writing more than sending email, so I launched this website to share what I know.


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